History

The Italian Luca Pacioli, recognized as The Father of accounting and book keeping was the first person to publish a work on double-entry bookkeeping, which then developed in medieval Europe. Accounting began to transition into an organized profession in the nineteenth century, with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.

Hindus believe that the Indian Chanakya created a work similar to a financial management book, during the period of the Maurya Empire. His book "Arthashasthra" contains few detailed aspects of maintaining books of accounts for a Sovereign State.

The history of accounting or accountancy is thousands of years old and can be traced to ancient civilizations.

The early development of accounting dates back to ancient Mesopotamia, and is closely related to developments in writing, counting and money and early auditing systems by the ancient Egyptians and Babylonians. By the time of the Emperor Augustus, the Roman government had access to

detailed financial information.

Accounting records dating back more than 7,000 years have been found in Mesopotamia, and documents from ancient Mesopotamia show lists of expenditures, and goods received and traded. The development of accounting, along with that of money and numbers, may be related to the taxation and trading activities of temples:

The early development of accounting was closely related to developments in writing, counting, and money. In particular, there is evidence that a key step in the development of counting—the transition from concrete to abstract counting—was related to the early development of accounting and money and took place in Mesopotamia

Other early accounting records were also found in the ruins of ancient Babylon, Assyria and Sumerian, which date back more than 7,000 years. The people of that time relied on primitive accounting methods to record the growth of crops and herds. Because there was a natural season to farming and herding, it was easy to count and

determine if a surplus had been gained after the crops had been harvested or the young animals weaned.

By the time of Emperor Augustus (63 BC - AD 14), the Roman government had access to detailed financial information as evidenced by the Res Gestae Divi Augusti (Latin: "The Deeds of the Divine Augustus"). The inscription was an account to the Roman people of the Emperor Augustus' stewardship, and listed and quantified his public expenditure, including distributions to the people, grants of land or money to army veterans, subsidies to the aerarium (treasury), building of temples, religious offerings, and expenditures on theatrical shows and gladiatorial games, covering a period of about forty years. The scope of the accounting information at the emperor's disposal suggests that its purpose encompassed planning and decision-making.

The Roman historians Suetonius and Cassius Dio record that in 23 BC, Augustus prepared a rationarium (account) which listed public revenues, the amounts of cash in the aerarium (treasury), in the provincial fisci (tax officials), and in the hands of the publicani (public contractors); and that it included the names of the freedmen and slaves from whom a detailed account could be obtained. The closeness of this information to the executive authority of the emperor

is attested by Tacitus' statement that it was written out by Augustus himself.

Double-entry bookkeeping

When medieval Europe moved towards a monetary economy in the 13th century, sedentary merchants depended on bookkeeping to oversee multiple simultaneous transactions financed by bank loans. One important breakthrough took place around that time: the introduction of double-entry bookkeeping, which is defined as any bookkeeping system in which there was a debit and credit entry for each transaction, or for which the majority of transactions were intended to be of this form. The historical origin of the use of the words "debit" and "credit" in accounting goes back to the days of single-entry bookkeeping, which had as its chief objective keeping track of amounts owed by customers (debtors) and amounts owed to creditors. Debit in Latin means "he owes" and credit in Latin means "he trusts".

The earliest extant evidence of full double-entry bookkeeping appears in the Farolfi ledger of 1299-1300. Giovanno Farolfi & Company, a firm of Florentine merchants headquartered in Nîmes, acted as moneylenders to the Archbishop of Arles, their most important customer. The oldest discovered record of a complete double-entry system is the Messari (Italian: Treasurer's) accounts of the city of Genoa in 1340. The Messari accounts contain debits and credits journalized in a bilateral form and carry forward balances from the preceding year, and therefore enjoy general recognition as a double-entry system.